Powerful lithium-ion batteries have conquered cell phones and laptops. The next frontier is the power drill and the saw.

For years, power tools have been restricted to heavy and weak nickel-cadmium and nickel-metal-hydride batteries because lithium-ion couldn’t deliver the necessary power levels. That is about to change, with consequences that reach far beyond the tool box.

Putting lighter, stronger batteries in drills, saws, and nail guns will prove the technology for other uses that demand high power and low weight. Think cars. It also doesn’t hurt that the power tool market is worth $22.8 billion worldwide, according to Cleveland, Ohio-based Freedonia Group, and that the lithium-ion battery market is expected to grow from $4.4 billion in 2004 to $6.3 billion in 2009.

Most of the growth is due to expanding cell phone sales and a shift to more powerful laptops, says Brian Barnett, a managing director at TIAX, a product development and consulting firm. “All of that is leading to growth rates for lithium-ion that are well above the growth of the GDP, population, or other measures,” he says.

But power tools are the second-largest market for rechargeable batteries after cell phones, according to the Institute of Information Technology in Tokyo. And venture capital is also getting interested. In November, lithium-ion startup A123 Systems said it raised more than $32 million from Qualcomm, Sequoia Capital, Motorola, North Bridge Venture Partners, the Massachusetts Institute of Technology, YankeeTek, and OnPoint Technologies, as well as from A123 Chairman Desh Deshpande.

While grand hopes are pinned on this new class of lithium-ion batteries, the technology had humble beginnings. Starting in 2003, some tool makers introduced small lithium-ion tools. But that was easy. Those were “low amp draw” tools requiring small, fairly steady flows of power, the same type of power that lithium-ions provide for other electronics. They were also single tools for everyday people, not tool sets targeted at professional contractors. They were the equivalent of scouts sent to explore a new, niche territory.

Now, however, lithium-ions are taking on the power-tool market in a more serious way, and big power-tool companies are leading the charge.

Tokyo’s Max said it was the first to launch a professional lithium-ion-based tool in January 2005, when it unveiled a lithium-ion-powered hammer drill in Japan. Milwaukee Electric Tools introduced its V28 series of 28-volt lithium-ion tools the same month, with its partner E-One Moli Energy, a battery company based in Maple Ridge, British Columbia. Then Home Depot declared the “Next Cordless Revolution” in November, when it began selling the V28 tools—a 28-volt hammer drill, reciprocating saw, circular saw, band saw, and impact wrench—along with Makita’s lighter 18-volt hammer driver drill, impact driver, circular saw, and flashlight in the United States.

More Rollouts

Also in November, Watertown, Massachusetts-based A123 Systems announced a lithium-ion battery for a new DeWalt line of Black & Decker power tools, and claimed it would last 10 times longer than traditional lithium-ions and provide five times as much power. Black & Decker unveiled the DeWalt tools in January.

Bosch Power Tools and Accessories is also expected to launch a line of 10.8-volt and 36-volt lithium-ion-based tools, called Litheon, in the second quarter of this year. The Mount Prospect, Illinois-based tool division of Robert Bosch Tools says it has built on the technology of its sister companies, Skil and Dremel, and will start selling its Litheon lines of 10.8-volt and 36-volt tools in the second quarter of this year.

The foray into power tools is the next logical step in the lithium-ion progression, Mr. Barnett says. “Lithium-ion is continuing to march across the application space, capturing more and more products,” he says. “It started with computers, then cell phones and camcorders, and then it’s gone into digital cameras, and in the last year it’s been moving into power tools. We expect to see the penetration in cordless tools increase, and we expect lithium-ion to continue that progression into other applications,” he says. Power tools will propel lithium-ions on their path of double-digit growth for a long time, he adds. It’s not just a road to profits.

The power-tool market is seen as a stepping-stone to an even more lucrative market—hybrid-electric vehicles (HEVs). The high-power, low-weight requirements of power tools closely match the requirements of hybrids, Mr. Barnett says. In a watch or a cell phone, the weight doesn’t matter as much as the size, and the amount of power required is small, while the need for energy—the length of time the power lasts—is more important. It’s the opposite for power tools and for hybrid cars. “It’s at the other extreme, because you have to take all that weight around with you, while the fact that there is 10 percent extra volume can be hidden under the car and not noticed,” Mr. Barnett says.

He adds that HEVs are “the ultimate goal” for lithium-ions. “The high power requirement in the [HEV] is part of why people became comfortable with putting lithium-ion in power tools,” Mr. Barnett says. So power tools are seen as a good technology stepping-stone for lithium-ion companies that dream of powering the next Prius. And companies working on batteries for hybrids see power tools as an ideal early market to pave the way. “Many of the same battery manufacturers that are targeting HEV are pursuing power tools,” he says. And many battery-industry watchers are keeping an eye on the power-tool market, hoping it will shed light on the competition for hybrid vehicles.

So, with all these drivers, why did it take so long to bring lithium-ions to power tools? The scientific challenge was a big one. Traditional lithium-ions couldn’t provide a lot of power at one time, instead dispensing a steady trickle over a longer period of time. Not only do power tools require higher amounts of power than cell phones and laptops, they also need more widely fluctuating amounts of power. A saw, for instance, will require a certain amount of power to cut through wood, and then will draw more power when it hits a knot in the wood, or a denser type of wood. “Power tools draw power in peaks and valleys, and more peaks than valleys,” explains Jason Feldner, a spokesperson for Bosch Power Tools.

Battery scientists also worry that those fluctuations could heat up lithium-ion batteries, deteriorating them more quickly. Compared to hardy NiCad batteries, lithium-ions are more sensitive to being overcharged or “deep discharged,” which is when they are used until they are nearly empty of charge. That deterioration and heat is especially concerning because lithium-ions have already run into trouble with overheating or catching fire, as evidenced by recalls of notebook batteries from Hewlett-Packard, Fujitsu Siemens Computers, and Apple Computer last year. Imagine the risks of a highly flammable battery in a car.

Untapped Markets

But with the prize of untapped markets beckoning, some scientists have made unexpected progress. Out-of-the-box labs and startups have tried new electrode designs and materials, and come out with prototype cells that are superior to some of the major players’ technologies, Mr. Barnett says.

The Massachusetts Institute of Technology, Argonne National Laboratory, and the Sandia National Laboratories are among the research centers pushing further lithium-ion innovation. Starting about two years ago, bigger battery players joined the game, making more breakthroughs in battery materials and design. Manufacturers also began designing battery packs with extra electronics to monitor the cells, prevent deterioration, and ensure safety, Mr. Barnett says.

In any case, in the turtle-paced world of battery innovation, lithium-ions are hatchlings. They still make up a tiny part of the power-tool market, and hybrids with lithium-ions could be years away, so startups have a long climb in trying to build a new market. Innovative startups also face large competitors like Sony and Samsung SDI.

Both the startups and the technology have a long way to go, and new materials are likely to be their next direction, Mr. Barnett says. A look at labs developing lithium-ions for the rest of the industry could give a hint of how power tools—and hybrid vehicles—might progress.

Contact the writer: JKho@RedHerring.com